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Motorola - the world's sixth largest chip maker, according to Dataquest - reckons the global chip business is slowing right down, decelerating from growth of 36 per cent last year down to 10-15 per cent in 2001.

That's some way below the industry's historical average growth rate of 17 per cent.

Motorola made its prediction after announcing a 19 per cent fall in orders during its fourth fiscal quarter. During the three-month period, Motorola's chip sales rose seven per cent to $1.9 billion, leading to profits for the company's semiconductor group of $158 million, nearly twice the year-ago quarter's $80 million earnings.

Motorola's figure for last year's growth in total worldwide semiconductor sales compares well with market researcher Dataquest's estimation of 31 per cent. Dataquest claims $222.1 billion worth of chips were sold last year, up from 1999 sales of $168.7 billion.

Unlike Motorola, however, Dataquest reckons that 2001 won't slow down to such a great extent. It believes the calendar Q4 dip in sales is as much about what it calls "inventory correction" as anything else, something the industry often experiences during periods of strong growth.

Unlike Motorola, Dataquest doesn't need to make contingency plans for potential hiccoughs in chip sales, so it doesn't need to be quite as pessimistic as the semiconductor company.

That said, the industry's trade body, the Semiconductor Industry Association, recently said it expects to see 17 per cent growth during the first calendar quarter of 2001, down from its estimate of 37.1 per cent for the whole of the industry throughout 2000. That's not as grim an outlook as Motorola's but not as positive as Dataquest's, and so is probably closer to what will happen.

There clearly is a slowdown in the world chip market, but not a shrinkage. Instead, the industry's explosive expansion over the last couple of years is simply settling down to its more typical growth rate. ®